
<p>In the Democrats’ evergreen policy of trying to buy votes with taxpayer money, we now have the student loan issue. ; Put simply, President Biden and his big-spending colleagues in Congress want to forgive up to $6.2 billion dollars in student loans. ; The various proposals run from partial forgiveness for those currently holding debt to complete forgiveness of all debt.</p>



<p>Democrats also have a plan to avoid the problem of student debt in the future. Free college. ; Oooops! ; Did I say free? ; Actually, the plan is for the taxpayer to pay the colleges. ; That is even a worse idea than the student loan program.</p>



<p>To understand the situation in which we find ourselves – or at least those of us with student loans – one needs to know how we got here.</p>



<p>We know that there are hundreds of thousands of degree-bearing folks who are straddled with significant debt. ; For many, it has taken the place of mortgages as a major personal or family obligation. ; In fact, it is preventing a lot of people from being able to purchase a home. ; Many are in the so-called “credit trap” barely able to keep up with the interest on the loans.</p>



<p>This has happened because the entire loan program had a fatal flaw. ; It was based on the false notion that government could enable folks to borrow more than they could afford without ramifications. ; It created an economic bubble much like the government-created housing bubble that led to the 2008 recession.</p>



<p>The entire plan ignored the reality that when there are third-party payers, the costs skyrocket. ; That is what happened to the student loans. ; They were not an economic benefit to the students, but to the educational institutions, they attended. ; The students were merely the vehicle to transfer money from Uncle Sam to the University of Whatever.</p>



<p>This resulted in American colleges and universities gathering more and more of this “free money” by raising tuition. ; In fact, the cost of education rose far faster than inflation. ; The Student Loan Program was a gold mine for the schools. ; Essentially, it made the return on the investment in education worth less than the cost – as we see today in so many cases.</p>



<p>Very few students would have – or could have – come up with the money to pay for the exorbitant tuition – neither from personal family resources nor conventional loans. ; The universities would have had to keep their tuition and other costs down to meet the real market. ; Again, remember the housing bubble.</p>



<p>Now that the Democrats have created this economic crisis for so many younger Americans, what are they proposing to do about it?</p>



<p>Put simply, they want to write off their mistake by simply cancelling all or a portion of the debt they created. ; How ironic &#8212; seeking political advantage by putting the past burden on the taxpayer disguised as a benefit. ;</p>



<p>A lot of Americans not only do not like the Democrats plan – it enrages them. ; First are those who have already paid off their student loans (like me).</p>



<p>(As I recall, my loan was less than $4000 for four years at Knox College – a college with a comparatively high tuition. ; Since I was a poor kid, the rest was made up in scholarships and a fraction from my parents and summer jobs. ; Ironically, I have recently been getting spam calls to help me pay off my student loan – which was paid off almost 50 years ago.  ; But I digress.)</p>



<p>In addition to those who have paid off their debt, what about those just entering college next year – and the years after? ; The tuitions have not gone down. ; The loan program is still pumping out money to feed the colleges and universities. In other words, if the Democrats simply puncture today’s bubble, they will be creating a future one. ;</p>



<p>There is one approach that is not even being considered by Democrats – creating policies, pressures and incentives to drive the tuition costs down. ; If I had the proverbial magic wand, that is where I would use it.</p>



<p>I would establish a formula that would create a target “fair tuition” number. ; It would vary from institution to institution based on hard costs – including administrative costs and faculty compensation to faculty (the other BIG beneficiary of the Student Loan Program). ; I would then reduce federal funding to those institutions – and grants to faculty &#8212; that exceed the standard. ; I would also consider banning the receipt of student loan money from schools that do not meet the standard. ;</p>



<p>We could also develop a plan through which the specific schools assume a portion of the debt that their students incurred – and let them decide to write it off, or not.</p>



<p>As is the case in so many of the Democrats’ spending plans, the student loan write-off has an inflationary side-effect. ; Just what we do not need at this time.</p>



<p>Unfortunately, there is no painless solution to the student loan crisis that the Democrats have created with their typical spend … spend … spend policies. ; Uncle Sam cannot be the economic resource for everybody all the time. ; Some challenges must be addressed at the state, local and personal levels. ; WE need to empower the free market, not usurp it. ; But Democrats do not believe in the basic concept of our ingenious federal system – and the Student Loan Program is just another sad example.</p>



<p>So. there &#8217;tis.</p>

Student Loans. A Bad Solution To A Bad Policy
